Sonaecom Registers PT Bid; Offer Values Co Above Peers
LISBON -(Dow Jones)- Sonaecom SGPS on Monday delivered its preliminary bid offer for Portugal Telecom to the market regulator to begin the formal registration process.
In the documents, Sonaecom reiterated its offer of EUR9.5 a share for PT's 1.13 billion shares, and said that values the telecom operator above its European peers.
Sonaecom said the offer, worth EUR10.7 billion, represents a 16.1% premium over PT's share price before the bid was announced Feb. 6, and a 20.8% premium when PT's planned dividend is included. It's also a 25.4% premium, including the dividend, over the EUR7.88 a share average price for PT's shares in the six months prior to the announcement of the offer.
On a valuation basis, Sonaecom said its offer represented 6.5 times PT's enterprise value to earnings before interest, taxes, depreciation and amortization for 2005, and 6.4 times EV/EBITDA for 2006. That was above EV/EBITDA of 5.9 times for 2005 and 5.2 times for 2006 for comparable European companies in the sector, Sonaecom said.
Sonaecom also said the offer was well above analysts' price targets for PT shares ahead of the bid, saying an average of 17 international and domestic bank reports set a target for PT of EUR8.67.
PT has called Sonaecom's approach hostile and says it significantly undervalues the company.
Sonaecom reiterated the basic conditions for its PT offer: to take at least 50.01% of the company, and for the general assembly of shareholders vote to change the company's statutes so that a single shareholder can own more than 10% of the outstanding shares.
Sonaecom said that if its bid is successful, it would replace "the majority" of PT's board with representatives of Sonaecom.
"Sonaecom proposes to acquire a controlling position in PT, ensuring a stable base of Portuguese shareholders for this important national asset," the statement said.
The company said its strategic plans for PT include reinforcing Sonaecom/PT's competitive capacity in the increasingly competitive Portuguese market, and reorienting the company's international strategy to companies where it has majority control.
Sonaecom reiterated that it plans to merge or otherwise consolidate its Optimus mobile phone unit with PT's TMN mobile phone unit. It said the resulting company would have around 63% of the Portuguese cellular market, but noted that the main competitor, Vodafone is expanding its market share and is big enough to maintain a strong competitive position.
Even so, Sonaecom said it is open to discussion with the Portuguese competition authority to agree on other remedies to ensure that consumers' interests are protected in the mobile market.
In the fixed-line sector, Sonaecom reiterated that it plans to sell off one of PT's networks - either its cable TV network or its copper wireline network - if the bid is successful.
And in the Internet and television sector, Sonaecom said it won't seek to close off platforms or shut out content. Instead, it will take measures to "ensure all interested parties have access to content, under fair terms and prices."
Sonaecom said it will analyze PT's current international operations in Brazil and Morocco to see whether it would be able to gain majority control. If not, it would turn its attentions to other markets, particularly in southwestern Europe. Sonaecom said the total investment aimed at international expansion wouldn't decline if it takes over PT.
PT runs a mobile joint venture in Brazil with Spain's Telefonica, where each holds a 50% stake, and is a minority partner along with Telefonica in a mobile operator in Morocco.
Sonaecom is a unit of conglomerate Sonae SGPS.
PT shares ended flat at EUR9.75 Monday. Sonae shares were unchanged at EUR1.32 a share, while Sonaecom shares were up 0.5% at EUR4.26.
-By Erik T. Burns, Dow Jones Newswires; +351 21 319 1863; erik.burns@dowjones.com
(END) Dow Jones Newswires "
Posted to the site on 27th February 2006